Competition Among Servers

This chapter deals with markets in which servers compete over the customers, usually by posting prices. Most of the models consider a game with two stages; servers act as leaders by announcing prices, and customers follow by selecting servers accordingly. Thus, the model computes customers’ equilibrium for any given set of prices, so that each customer optimizes his own welfare by choosing a server. Then, an equilibrium among the servers is computed, where each server sets a price that maximizes its profits, given the prices of the others. At this stage, the servers assume that for each set of prices, the arrival rates are determined by the corresponding customers’ equilibrium.